Exela Technologies, Inc. Reports Third Quarter 2018 Results
Exela Technologies, Inc. Reports Third Quarter 2018 Results

Revenue of $383.0 million an increase of 7% over Q3 2017 on a pro forma basis; Net Loss of $28.9 million; EBITDA of $43.7 million; Expect 2018 revenue to be between $1.58 billion to $1.59 billion

Third Quarter 2018 Highlights:

Revenue of $383.0 million, representing 7% growth over Q3 2017 on a pro forma basis

Operating income of $6.4 million, representing an improvement of $81.9 million over Q3 2017 on a pro forma basis

Net loss of $28.9 million, a year-over-year improvement from a pro forma net loss of $130.5 million

EBITDA(1) of $43.7 million, representing an improvement of $143.7 million over Q3 2017 on a pro forma basis

Adjusted EBITDA(2) of $68.9 million, representing 24% growth over Q3 2017 on a pro forma basis

Achieved $17.1 million of savings during the third quarter of 2018

Previously announced share buyback program remains in effect and 225,504 of common stock repurchased during Q3 2018

IRVING, Texas, Nov. 08, 2018 (GLOBE NEWSWIRE) -- Exela Technologies, Inc. (“Exela” or the “Company”) (NASDAQ: XELA), a leader in location agnostic Business Process Automation (“BPA”), announced today its financial results for the third quarter ended September 30, 2018.

Exela reported strong financial growth with third quarter revenue of $383 million, an increase of 7% on a pro forma basis, and Adjusted EBITDA of $69 million, an increase of 24% on a year-over-year pro forma basis for 2017. Exela has invested approximately $60 million for the nine months ended September 30, 2018, to further accelerate growth and integration, capitalize on our leading position in the marketplace and strengthen our differentiated offerings.

“Our transformative business process automation solutions are resonating well with customers. Exela’s differentiated location agnostic high automation services, Enterprise SaaS offerings and our BPA suite, DigitalNowSM are beginning to show results with substantial growth in pipeline. Recently, a top 10 bank and financial services company that we have worked with for over a decade expanded their relationship with Exela, signing a contract estimated to be $100 million of revenue over the next three years.” said Ronald Cogburn, Chief Executive Officer of Exela.

James Reynolds, Chief Financial Officer of Exela, said “We expect our full year 2018 revenue to be between $1.58 billion to $1.59 billion with growth of 8.5 to 9% year-over-year. The increasing market receptiveness to DigitalNowSM has exceeded our expectations, and therefore we have accelerated our investments for future profitable growth. This key strategic initiative, when coupled with lower project revenue in our LLPS segment and the exit from a low margin contract, will have some short-term impact on our Adjusted EBITDA.. Accordingly, we are now forecasting Adjusted EBITDA for the year to be between $280 million to $290 million, representing year-over-year growth of 14 to 18%”.

Financial information contained in this press release, unless otherwise stated, is presented pro forma for the business combination of Quinpario Acquisition Corp. 2 (now Exela), SourceHOV Holdings, Inc. (“SourceHOV”) and Novitex Holdings, Inc. (“Novitex”), which closed on July 12, 2017 (the “Business Combination”). The primary pro forma adjustment is to include the results of Novitex for the period January 1, 2017 to June 30, 2017. For more information, please refer to the reconciliation of reported to pro forma financial results contained in the Schedules to this press release.

Third Quarter Ended September 30, 2018 Financial Highlights

(Note: all third quarter 2017 numbers, unless otherwise stated, are presented on a pro forma basis.)

  • Revenue: Revenue of $383.0 million, an increase of 7.0% from $358.2 million in the third quarter of 2017 on a pro forma basis. Please refer to the pro forma revenue reconciliation contained in this press release for the third quarter of 2017. Revenue for our Information and Transaction Processing Solutions (“ITPS”) segment was $307.3 million, an increase of 9.8% year-over-year, driven primarily by revenue from the DigitalNowSM model, growth investments and acquisitions offset by a decline in business with lower automation. Healthcare Solutions (“HS”) revenue was $56.8 million, an increase of 1% year-over-year due to its ramp up of new business and is poised to grow in future periods. Legal and Loss Prevention Services (“LLPS”) revenue was $18.9 million. Results in LLPS are event driven and were negatively impacted by projects that generated lower revenue.
  • Low customer concentration with top 150 customers comprising 68% of revenue.
  • 10 customers generating over $25 million in annual revenue, an increase from 6 customers at the beginning of 2018.
  • 249 customers with over $1 million in annual revenue, an increase from 200 in December 2017.
  • 8%(3) increase in revenue per FTE to $72 thousand, from $66 thousand per FTE in December 2017.
  • $60 million invested in the business year-to-date to drive growth and integration.
  • Net Loss: Net Loss for the third quarter of 2018 totaled $28.9 million, an improvement of $101.6 million when compared to a pro forma net loss of $130.5 million in the third quarter of 2017. The improvement in third quarter 2018 net loss was driven by $81.9 million higher operating income that was offset by higher income tax expense of $36.3 million, for a net increase of $45.6 million. The third quarter of 2017 also included $53 million in charges for extinguishment of debt.
  • Adjusted EBITDA: Adjusted EBITDA for the third quarter of 2018 was $68.9 million a margin of 18% and increased 23.6% when compared to pro forma Adjusted EBITDA of $55.5 million and a margin of 16% in the third quarter of 2017. The increase in third quarter 2018 Adjusted EBITDA was primarily driven by revenue growth, the Company’s cost savings initiatives, and partially offset by investments the Company made for growth.
  • Capital Expenditures: Capital expenditures for the third quarter of 2018 was 1.7% of revenue compared to 2.2% on a year over year basis.
  • Common Stock: As of September 30, 2018, total shares outstanding were 158,278,484 which includes 1,043,497 of treasury stock and 5,586,344 shares for outstanding preferred shares on an as-converted basis.
  • Share buyback: During the third quarter of 2018, the Company repurchased 225,504 shares. The cumulative shares repurchased under the Company’s share buyback program totaled 1,043,497 in the aggregate since the inception of the program.

 

Balance Sheet and Liquidity

At September 30, 2018, Exela’s total liquidity was $124 million, measured as $45(4) million of cash excluding restricted cash, and an undrawn revolving credit facility of $100 million with $20.6 million reserved for letters of credit. Total net debt was $1.383 billion.

 

Updated 2018 guidance

  • Revenue range $1.58 billion to $1.59 billion, approximately 8.5% growth y-o-y.
  • Adjusted EBITDA range $280 million to $290 million, over 14% growth y-o-y.

Note: Guidance is based on constant-currency.

 

Note on Outlook: The Company has not forecasted net income/(loss) on a forward-looking basis due to the high variability and difficulty in predicting certain items that affect GAAP net income/(loss). Adjusted EBITDA should not be used to predict net income/(loss) as the difference between the two measures is variable.

The above guidance is based on third quarter 2018 results.

Please refer to attached schedules for reconciliations. Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect absolute figures.

(1) – EBITDA is a non-GAAP measure. A reconciliation of EBITDA is attached to this release.

(2) – Adjusted EBITDA is a non-GAAP measure. A reconciliation of Adjusted EBITDA is attached to this release.

(3) – Presented on a pro forma basis with acquisitions for the TTM period.

(4) – Calculated as cash, restricted cash and cash equivalents totaling $49.6 million, less $4.6 million of restricted cash that is subject to legal restrictions as of September 30, 2018.

Earnings Conference Call and Audio Webcast

Exela will host a conference call to discuss its third quarter 2018 financial results today at 5:00 p.m. ET. To access this call, dial 833-255-2831 or +412-902-6724 (international). A replay of this conference call will be available through November 15, 2018 at 877-344-7529 or +412-317-0088 (international). The replay passcode is 10124229. A live webcast of this conference call will be available on the “Investors” page of the Company’s website (www.exelatech.com). A supplemental slide presentation that accompanies this call and webcast can be found on the investor relations website (http://investors.exelatech.com) and will remain available after the call. Exela has also posted additional historical financial information regarding SourceHOV and on a combined basis to its investor relations website, (http://investors.exelatech.com).

About Exela:

Exela Technologies, Inc. (“Exela”) is a location-agnostic global business process automation ("BPA") leader combining industry-specific and multi-industry enterprise software and solutions with decades of experience. Our BPA suite of solutions are deployed in banking, healthcare, insurance and other industries to support mission critical environments. Exela is a leader in work flow automation, attended and un-attended cognitive automation, digital mail rooms, print communications, and payment processing with deployments across the globe.

Exela partners with customers to improve user experience and quality through operational efficiency. Exela serves over 3,700 customers across more than 50 countries, through a secure, cloud-enabled global delivery model. We are 22,000 employees strong across the Americas, Europe and Asia. Our customer list includes 60% of the Fortune® 100, along with many of the world’s largest retail chains, banks, law firms, healthcare insurance payers and providers and telecom companies. Find out more at www.exelatech.com

 

Follow Exela on Twitter: https://twitter.com/exelatech

Follow Exela on LinkedIn: https://www.linkedin.com/company/11174620/

 

About Non-GAAP Financial Measures

This press release includes EBITDA and Adjusted EBITDA, each of which is a financial measure that is not prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Exela believes that the presentation of these non-GAAP financial measures will provide useful information to investors in assessing our financial performance, results of operations and liquidity and allows investors to better understand the trends in our business and to better understand and compare our results. Exela’s board of directors and management use EBITDA and Adjusted EBITDA to assess Exela’s financial performance, because it allows them to compare Exela’s operating performance on a consistent basis across periods by removing the effects of Exela’s capital structure (such as varying levels of debt and interest expense, as well as transaction costs resulting from the Business Combination and other such capital markets based activities. Adjusted EBITDA also seeks to remove the effects of integration and related costs to achieve the savings, any expected reduction in operating expenses due to the Business Combination, asset base (such as depreciation and amortization) and other similar non-routine items outside the control of our management team. Exela does not consider these non-GAAP measures in isolation or as an alternative to liquidity or financial measures determined in accordance with GAAP. A limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in Exela’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management about which expenses and income are excluded or included in determining these non-GAAP financial measures and therefore the basis of presentation for these measures may not be comparable to similarly-titled measures used by other companies. These non-GAAP financial measures are not required to be uniformly applied, are not audited and should not be considered in isolation or as substitutes for results prepared in accordance with GAAP. Net loss is the GAAP measure most directly comparable to the non-GAAP measures presented here. For reconciliation of the comparable GAAP measures to these non-GAAP financial measures, see the schedules to this release. Optimization and restructuring expenses and merger adjustments are primarily related to the implementation of strategic actions and initiatives related to the Business Combination. All of these costs are variable and dependent upon the nature of the actions being implemented and can vary significantly driven by business needs. Accordingly, due to that significant variability, we exclude these charges since we do not believe they truly reflect our past, current or future operating performance.

Forward-Looking Statements

Certain statements included in this press release are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “may”, “should”, “would”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “seem”, “seek”, “continue”, “future”, “will”, “expect”, “outlook” or other similar words, phrases or expressions. These forward-looking statements include statements regarding our industry, future events, the estimated or anticipated future results and benefits of the business combination of Quinpario Acquisition Corp. 2 (now Exela), SourceHOV Holdings, Inc., (“SourceHOV”) and Novitex Holdings, Inc. (“Novitex”), which formed Exela Technologies, Inc. (“Exela”), and closed on July 12, 2017 (including the related transactions, the “Business Combination”), future opportunities for the combined company, and other statements that are not historical facts. These statements are based on the current expectations of Exela management and are not predictions of actual performance. These statements are subject to a number of risks and uncertainties regarding Exela’s business, and actual results may differ materially. These risks and uncertainties include, but are not limited to, changes in the business environment in which Exela operates and general financial, economic, regulatory and political conditions affecting the industries in which Exela operates; changes in taxes, governmental laws and regulations; competitive product and pricing activity or failure to realize the anticipated benefits of the Business Combination, including as a result of a delay or difficulty in integrating the businesses of SourceHOV and Novitex or the inability to realize the expected amount and timing of cost savings and operating synergies of the Business Combination; and those factors discussed under the heading “Risk Factors” in Exela’s Annual Report on Form-10-K filed with the Securities and Exchange Commission (“SEC”) on March 16, 2018 as supplemented by the risk factors contained in our quarterly report on Form 10-Q for the quarter ended June 30, 2018. In addition, forward-looking statements provide Exela’s expectations, plans or forecasts of future events and views as of the date of this communication. Exela anticipates that subsequent events and developments will cause Exela’s assessments to change. These forward-looking statements should not be relied upon as representing Exela’s assessments as of any date subsequent to the date of this press release.

Exela Technologies

Condensed Consolidated Balance Sheets

as of September 30, 2018 and December 31, 2017

(in thousands of United States dollars unless otherwise noted)

 

 
  September 30,   December 31, 
  2018   2017
  (Unaudited)  
Assets        
Current assets        
Cash and cash equivalents   $ 40,692     $ 39,000  
Restricted cash     8,955       42,489  
Accounts receivable, net of allowance for doubtful accounts of $4,427 and $3,725, respectively   253,986       229,704  
Inventories, net     16,122       11,922  
Prepaid expenses and other current assets     26,933       24,596  
Total current assets       346,688         347,711  
Property, plant and equipment, net     131,156       132,908  
Goodwill     749,762       747,325  
Intangible assets, net     398,280       464,984  
Deferred income tax assets     14,810       9,019  
Other noncurrent assets     21,650       12,891  
Total assets   $    1,662,346     $    1,714,838  
Liabilities and Stockholders’ Deficit        
Liabilities        
Current liabilities        
Accounts payable   $ 90,673     $ 81,263  
Related party payables     10,756       14,445  
Income tax payable     5,422       3,612  
Accrued liabilities     41,397       49,383  
Accrued compensation and benefits     54,975       46,925  
Accrued interest     23,845       55,102  
Customer deposits     39,419       31,656  
Deferred revenue     18,084       12,709  
Obligation for claim payment     52,889       42,489  
Current portion of capital lease obligations     15,926       15,611  
Current portion of long-term debt     20,062       20,565  
Total current liabilities       373,448         373,760  
Long-term debt, net of current maturities     1,307,884       1,276,094  
Capital lease obligations, net of current maturities     22,945       25,958  
Pension liability     30,376       25,496  
Deferred income tax liabilities     2,115       5,362  
Long-term income tax liability     3,470       3,470  
Other long-term liabilities     15,307       14,704  
Total liabilities   $    1,755,545     $    1,724,844  
Commitments and Contingencies (Note 9)        
Stockholders' deficit        
Common stock, par value of $0.0001 per share; 1,600,000,000 shares authorized; 152,692,140 shares issued and 151,648,643 outstanding at September 30, 2018 and 150,578,451 shares issued and 150,529,151 outstanding at December 31, 2017   $ 15     $ 15  
Preferred stock, par value of $0.0001 per share; 20,000,000 shares authorized; 4,569,233 shares issued and outstanding at September 30, 2018 and 6,194,233 shares issued and outstanding at December 31, 2017     1       1  
Additional paid in capital     482,018       482,018  
Less:common stock held in treasury, at cost; 1,043,497 shares at September 30, 2018 and 49,300 shares at December 31, 2017     (5,148 )     (249 )
Equity based compensation     38,601       34,085  
Accumulated deficit     (594,162 )     (514,628 )
Accumulated other comprehensive loss:        
Foreign currency translation adjustment     (3,833 )     (194 )
Unrealized pension actuarial losses, net of tax     (10,691 )     (11,054 )
Total accumulated other comprehensive loss     (14,524 )     (11,248 )
Total stockholders' deficit       (93,199 )       (10,006 )
Total liabilities and stockholders' deficit   $    1,662,346     $    1,714,838  
                 

 

    Exela Technologies

Condensed Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2018 and 2017 (Loss) (Unaudited)

(in thousands of United States dollars except share and per share amounts unless otherwise noted)

 
  Three Months ended September 30,   Nine Months ended September 30,
    2018       2017       2018       2017  
  Revenue   $ 383,030     $ 338,393     $ 1,186,579     $ 766,035  
  Cost of revenue (exclusive of depreciation and amortization)     295,936       255,116       903,682       539,242  
  Selling, general and administrative expenses     44,913       102,048       137,231       172,626  
  Depreciation and amortization     35,041       28,052       109,428       70,779  
  Related party expense     759       26,892       3,267       31,733  
  Operating income (loss)     6,381       (73,715 )     32,971       (48,345 )
  Other expense (income), net:                
  Interest expense, net     38,339       37,652       114,883       91,740  
  Loss on extinguishment of debt     1,067       35,512       1,067       35,512  
  Sundry expense (income), net     (2,571 )     563       (4,961 )     2,960  
  Other income, net     (781 )     -       (4,813 )     -  
  Net loss before income taxes     (29,673 )     (147,442 )     (73,205 )     (178,557 )
  Income tax benefit (expense)     733       37,002       (4,911 )     32,924  
  Net loss     (28,940 )     (110,440 )     (78,116 )     (145,633 )
  Dividend equivalent on Series A Preferred Stock related to beneficial conversion feature     -       (16,375 )     -       (16,375 )
  Cumulative dividends for Series A Preferred Stock     (914 )     (1,225 )     (2,742 )     (1,225 )
  Net loss attributable to common stockholders   $ (29,854 )   $ (128,040 )   $ (80,858 )   $ (163,233 )
  Net loss per share - basic and diluted   $ (0.20 )   $ (2.08 )   $ (0.53 )   $ (3.98 )
                                   
                                   

 

Exela Technologies

Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2018 and 2017 (Unaudited)

(in thousands of United States dollars unless otherwise noted)

    Nine Months ended September 30,
      2018       2017  
Cash flows from operating activities        
Net loss   $   (78,116 )   $   (145,633 )
Adjustments to reconcile net loss        
Depreciation and amortization       109,428         70,779  
Fees paid in stock       -         23,875  
HGM Contract Termination Fee paid in stock       -         10,000  
Original issue discount and debt issuance cost amortization       8,062         9,684  
Provision (recovery) for doubtful accounts       2,470         451  
Deferred income tax benefit       (3,689 )       (37,186 )
Share-based compensation expense       4,516         4,446  
Foreign currency remeasurement       (2,040 )       777  
Gain on sale of Meridian       -         (588 )
Loss on sale of assets       1,835         508  
Fair value adjustment for interest rate swap       (5,456 )       -  
Change in operating assets and liabilities, net of effect from acquisitions        
Accounts receivable       (6,374 )       (2,784 )
Prepaid expenses and other assets       (5,770 )       189  
Accounts payable and accrued liabilities       (23,457 )       48,745  
Related party payables       (3,689 )       4,936  
Net cash used in operating activities       (2,280 )       (11,801 )
         
Cash flows from investing activities        
Purchases of property, plant and equipment       (14,077 )       (7,001 )
Additions to internally developed software       (3,080 )       (6,348 )
Additions to outsourcing contracts       (5,427 )       (8,574 )
Proceeds from sale of Meridian       -         4,582  
Cash acquired in Quinpario reverse merger       -         91  
Cash paid in acquisition, net of cash received       (6,513 )       (423,428 )
Proceeds on sale of assets       1,095         11  
Net cash used in investing activities       (28,002 )       (440,667 )
         
Cash flows from financing activities        
Change in bank overdraft       -         (210 )
Loss on extinguishment of debt       1,067         35,512  
Proceeds from issuance of stock       -         231,448  
Repurchases of common stock       (4,899 )       -  
Proceeds from financing obligations       3,068         3,040  
Contribution from shareholders       -         20,548  
Proceeds from credit facility       30,000         1,320,500  
Retirement of previous credit facilities       -         (1,055,736 )
Cash paid for debt issuance costs and debt discounts       (1,094 )       (39,837 )
Cash paid for equity issue costs       (7,500 )       (149 )
Borrowings from revolver and swing-line loan       30,000         72,600  
Repayments from revolver and swing line loan       (30,000 )       (72,500 )
Principal payments on long-term obligations       (21,647 )       (32,647 )
Net cash provided by (used in) financing activities       (1,005 )       482,569  
Effect of exchange rates on cash       (554 )       335  
Net increase (decrease) in cash and cash equivalents       (31,842 )       30,436  
Cash, restricted cash, and cash equivalents        
Beginning of period       81,489         34,253  
End of period   $   49,647     $   64,689  
         
Supplemental cash flow data:        
Income tax payments, net of refunds received   $   5,296     $   2,673  
Interest paid       136,396         60,347  
Noncash investing and financing activities:        
Assets acquired through capital lease arrangements       9,318         2,080  
Leasehold improvements funded by lessor       1,565         74  
Issuance of common stock as consideration for Novitex       -         244,800  
Accrued capital expenditures       1,994         3,512  
Accretion of dividend equivalents       -         16,375  

 

Exela Technologies

Schedule 1: Pro Forma Third Quarter 2017 vs. Third Quarter 2018 Financial Performance

         
           
$ in millions Q3'17 Q3'18   Change ($)
Information and Transaction Processing Solutions 279.8   307.3     27.5  
Healthcare Solutions 56.4   56.8     0.4  
Legal and Loss Prevention Services 22.0   18.9     (3.1 )
Total Revenue    358.2     383.0       24.9  
% change   7 %    
           
Cost of revenue (exclusive of depreciation and amortization) 271.1   295.9     24.8  
Gross profit    87.1     87.1       0.0  
% change   0 %    
as a % of revenue 24 % 23 %    
           
SG&A 106.5   44.9     (61.6 )
Depreciation and amortization 29.2   35.0     5.8  
Impairment of goodwill and other intangible assets -   -     -  
Related party expense 26.9   0.8     (26.1 )
Operating (loss) income    (75.5 )   6.4       81.9  
as a % of revenue -21 % 2 %    
           
Interest expense, net 38.3   38.3     0.0  
Loss on extinguishment of debt 53.0   1.1     (51.9 )
Sundry expense (income) & Other income, net 0.7   (3.4 )   (4.0 )
Net loss before income taxes    (167.5 )   (29.7 )     137.9  
Income tax expense (benefit) (37.0 ) (0.7 )   36.3  
Net income (loss)    (130.5 )   (28.9 )     101.6  
as a % of revenue -36 % -8 %    
           
Depreciation and amortization 29.2   35.0     5.8  
Interest expense, net 38.3   38.3     0.0  
Income tax expense (benefit) (37.0 ) (0.7 )   36.3  
EBITDA    (100.0 )   43.7       143.7  
as a % of revenue -28 % 11 %    
           
EBITDA Adjustments         
  1 Transaction and integration costs 79.3   0.2     (79.1 )
  2 Optimization and restructuring expenses 20.9   19.4     (1.4 )
  3 Gain / loss on derivative instruments -   (0.8 )   (0.8 )
  4 Other Charges 55.3   6.3     (49.0 )
Adjusted EBITDA    55.5     68.9       13.4  
% change   24 %    
as a % of revenue 16 % 18 %    
           

 

 Exela Technologies

Schedule 2: Pro Forma YTD 2017 vs. YTD 2018 Financial Performance

Exela Technologies, Inc.        
Quarterly Pro-Forma Income Statement        
           
$ in millions YTD Q3'17 YTD Q3'18   Change ($)
Information and Transaction Processing Solutions   829.5     949.3       119.8  
Healthcare Solutions   173.5     171.7       (1.8 )
Legal and Loss Prevention Services   66.9     65.4       (1.5 )
Total Revenue   1,070.0     1,186.6       116.6  
% change   11 %    
           
Cost of revenue (exclusive of depreciation and amortization)   790.0     903.7       113.7  
Gross profit   280.0     282.9       2.9  
% change   1 %    
as a % of revenue 26 % 24 %    
           
SG&A   207.4     137.2       (70.2 )
Depreciation and amortization 91.4   109.4     18.0  
Impairment of goodwill and other intangible assets -   -     -  
Related party expense 32.0   3.3     (28.8 )
Operating (loss) income   (50.9 )   33.0       83.8  
as a % of revenue -5 % 3 %    
           
Interest expense, net 116.7   114.9     (1.8 )
Loss on extinguishment of debt 53.0   1.1     (51.9 )
Sundry expense (income) & Other income, net 3.1   (9.8 )   (12.9 )
Net loss before income taxes   (223.6 )   (73.2 )     150.4  
Income tax expense (benefit) (39.9 ) 4.9     44.8  
Net income (loss)   (183.8 )   (78.1 )     105.7  
as a % of revenue -17 % -7 %    
           
Depreciation and amortization 91.4   109.4     18.0  
Interest expense, net 116.7   114.9     (1.8 )
Income tax expense (benefit) (39.9 ) 4.9     44.8  
EBITDA   (15.5 )   151.1       166.7  
as a % of revenue -1 % 13 %    
           
EBITDA Adjustments        
  1 Transaction and integration costs 96.6   2.1     (94.5 )
  2 Optimization and restructuring expenses 36.9   47.0     10.0  
  3 Gain / loss on derivative instruments -   (4.8 )   (4.8 )
  4 Other Charges 64.6   13.2     (51.4 )
Adjusted EBITDA   182.5     208.6       26.0  
% change   14 %    
as a % of revenue 17 % 18 %    
           

 

 Exela Technologies

Schedule 3: Adjusted EBITDA Reconciliation –

Three months ended and Nine months ended September 30, 2017

                         
($ in millions)   Q3 2017(1)   YTD 2017(1)
  As Reported   Novitex   Pro Forma   As Reported   Novitex   Pro Forma
Net loss   ($110.4 )   ($20.1 )   ($130.5 )   ($145.6 )   ($38.1 )   ($183.8 )
Taxes     (37.0 )     0.0       (37.0 )     (32.9 )     (6.9 )     (39.9 )
Interest expense     37.7       0.6       38.3       91.7       24.9       116.7  
Depreciation and amortization       28.1         1.2         29.2         70.8         20.6         91.4  
EBITDA   ($81.7 )   ($18.2 )   ($100.0 )   ($16.0 )   $0.5     ($15.5 )
                         
Transaction related costs     77.3       2.0       79.3       86.6       10.0       96.6  
Optimization and restructuring expenses     19.7       1.2       20.9       31.5       5.4       36.9  
Other Charges     37.8       17.5       55.3       44.1       20.5       64.6  
Adjusted EBITDA   $53.1     $2.5     $55.5     $146.1     $36.4     $182.5  
                         

 

(1) Net loss for the period is presented on the basis of the previous debt structure of the respective standalone companies that became Exela as a result of the Business Combination. As of July 12th, 2017 those debt structures were replaced with new debt consisting of $350 million Term Loan and $1.0 billion Senior Secured Notes.

 

Exela Technologies

Schedule 4: Revenue and Expense Reconciliation

Three months ended and Nine months ended September 30, 2017

                         
    Q3 2017(1)   YTD 2017(1)
($ in millions)   As Reported   Novitex   Pro Forma   As Reported   Novitex   Pro Forma
Revenue   $338.4     $19.8     $358.2     $766.0     $304.0     $1,070.0  
Cost of revenue (exclusive of depreciation and amortization)     255.1       16.0       271.1       539.2       250.8       790.0  
Selling, general and administrative expenses (Including related party)     128.9       4.4       133.4       204.4       35.1       239.4  
Depreciation and amortization     28.1       1.2       29.2       70.8       20.6       91.4  
Operating income (loss)     (73.7 )     (1.8 )     (75.5 )     (48.3 )     (2.5 )     (50.9 )
                         
Interest expense, net     37.7       0.6       38.3       91.7       24.9       116.7  
Loss / (Gain) on extinguishment of debt     35.5       17.5       53.0       35.5       17.5       53.0  
Sundry expense & other income, net     0.6       0.0       0.7       3.0       0.0       3.1  
Net loss before income taxes     (147.4 )     (20.0 )     (167.5 )     (178.6 )     (45.0 )     (223.6 )
Income tax (benefit) expense     (37.0 )     0.0       (37.0 )     (32.9 )     (6.9 )     (39.9 )
Net loss   ($110.4 )   ($20.0 )   ($130.5 )   ($145.6 )   ($38.0 )   ($183.8 )
                         

 

(1) Net loss for the period is presented on the basis of the previous debt structure of the respective standalone companies that became Exela as a result of the Business Combination. As of July 12, 2017 those debt structures were replaced with new debt consisting of $350 million Term Loan and $1.0 billion Senior Secured Notes.

 

Contact: Jim Mathias

E: ir@exelatech.com

W: http://investors.exelatech.com

T: +1 972-821-5808